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Compaq alert spooks bourses
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April 12, 1999: 5:40 a.m. ET
London's FTSE 100 sheds 1 percent after Compaq profit warning; Dax steadies
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LONDON (CNNfn) - A profit alert by U.S. computer giant Compaq, issued after U.S. markets closed Friday, rattled many European markets Monday, exerting pressure on technology stocks.
Compaq (CPQ), the world's leading maker of personal computers, sent a shock wave through markets after warning it expected to post first-quarter profits of 15 cents per share, more than 50 percent less than the 31 cents anticipated by Wall Street analysts. In Europe, Compaq stock was trading some 20 percent lower.
On the Globex trading system, a key gauge of U.S. stock directions, S&P futures were down sharply Monday morning, stoking concerns that the Dow Jones industrial average may be in for a rough ride later Monday.
After a weak start, London's FTSE 100 extended its losses Monday morning, slipping just over 1 percent, or 65 points, to 6,407.7. Overnight losses in Asia, where Tokyo's Nikkei index gave up 2 percent, added to the selling pressure in London.
Tech stocks came under pressure across the European spectrum. German business software firm SAP [FSE:FSAP3] dipped 1.7 percent in Frankfurt, Finnish mobile-phone giant Nokia was off 2 percent, while French chipmaker STMicroelectronics (PSGS) gave up nearly 3 percent to 104.7 euros.
The Compaq warning came on top of anxiety about Europe's shaky economic landscape and background concerns about the escalating conflict in Kosovo.
Germany's electronically-traded Xetra Dax held steady in the plus column by mid-morning Monday.
The Dax was up 0.52 percent, or 26.93 points, at 5,160.85. The impact of the Compaq warning is likely to have less of an impact on Frankfurt's headline index, which is light in technology stocks. Electrical giant Siemens (FSIE) was down 0.10 euros at 62.80.
Swiss blue chips were off 0.37 percent at 7,359.8 in early trade, but like its German counterpart the SMI index has little exposure to high-tech companies.
In Paris, where tech stocks have a much bigger weighting, the CAC 40 pared some early losses but was still off 0.14 percent at 4,356.90.
Bucking the downtrend, shares in Kwik-Fit (KWFT), Europe's largest independent fast-fit auto repair chain, surged more than 28 percent, to 543 pence, in London after number-two U.S. carmaker Ford Motor Co. (F) announced plans to purchase the company for one billion pounds ($1.62 billion).
The battle may heat up this week in one of Europe's nastier telecom tussles in recent memory. Telecom Italia is said to be considering a white knight defense to ward off hostile advances from its diminutive suitor, Olivetti, after TI failed to muster a quorum at a strategy-planning shareholder meeting this weekend. TI shares dipped 5 percent in Milan early Monday.
Among those seen as possible new bidders, according to London's Financial Times, are British Telecommunications (BT.A), Deutsche Telekom (FDTE) and Spain's Telefonica.
In the media sector, shares of Anglo-Dutch Reed Elsevier (REED) were down 1.27 percent at 584 pence following a newspaper report over the weekend that Reed is mulling a 4 billion pound ($6.43 billion) disposal of its business publishing and exhibitions business.
The euro was higher against the yen and slightly firmer at $1.0844 against the dollar.
-- from staff and wire reports
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